ti workshop: corruption and governance in environmental ... · 2. governance gaps in the...
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TI Workshop: Corruption and Governance in
Environmental Management
Global Environmental Law and Politics Master, Freiburg University
Freiburg, January 14, 2016
Berta van Schoor & Gerd Addicks
TI Germany, Baden-Württemberg Regional Chapter
Agenda
1. Transparency International in Germany and Worldwide
2. Governance Gaps in the International Anti-Corruption Framework
3. Closing the Gap – Which Role Do Companies and NGOs Play?
4. Natural Resource Governance and Corruption
5. Case Study: Extractive Industries Transparency Initiative (EITI)
6. Corruption Scenarios
Agenda
1. Transparency International in Germany and Worldwide
2. Governance Gaps in the International Anti-Corruption Framework
3. Closing the Gap – Which Role Do Companies and NGOs Play?
4. Natural Resource Governance and Corruption
5. Case Study: Extractive Industries Transparency Initiative (EITI)
6. Corruption Scenarios
• Founded in 1993
• Initiator of a Global Anti-
corruption Movement
• International Non-governmental
organisation
• Guiding Principles:
Transparency, Integrity, and
Accountability
Transparency International
Prof. Dr. Peter Eigen
Founder of Transparency
International
„Corruption is the evil of
our times“
• National Chapters in
over 100 countries
• National Chapters work
independently and self-
financed
• International Secretariat
in Berlin as central
coordination and service
point
Transparency International –
As international as corruption
José Carlos Ugaz (Chair); Peru
Elena A. Panfilova (Vice Chair); Russia
Transparency International - Board members
Working
together with
Civil Society
Politics Economy
• Non-profit
• Politically independent
• No investigative research of
concrete cases
• Transparency as instrument
against corruption
• Responsibility (accountability)
• Coalition-building and
cooperation instead of
confrontation
Principles of Transparency International
How do we fight Corruption?
• Keep corruption on daily agenda
• Inform the public & raise
awareness
• Create structures hindering
corruption or increase
cost of corruption
• Use „Windowsof Opportunity“
• Public relations
• Media
• Lobbying
• Academic studies/Analyses
Targets Means
Bribe
Payers
Index
Corruption
Perceptions
Index
Global
Corruption
Report
Global
Corruption
Barometer
Perceive,
analyse and talk
about
Corruption
The Instruments of
Transparency International
Transparency
Ranking of
Multinationals
Integrity
Pact
Corruption Perceptions Index 2014
Rank Country CPI 2014 No of Surveys CPI 2013
1 Denmark 92 7 91
2 New Zealand 91 7 91
3 Finland 89 7 89
4 Sweden 87 7 89
5 Norway 86 9 86
7 Singapore 84 6 86
10 Canada 81 7 81
12 Germany 79 8 78
15 Japan 76 8 74
17 United States 74 8 73
17 Hong Kong 74 7 75
(…)
23 Austria 72 7 69
26 France 69 7 71
(…)
43 South Korea 55 9 55
47 Costa Rica 54 5 53
(…)
69 Italy 43 7 43
69 Brazil 43 7 42
Rank Country CPI 2014 No of Surveys CPI 2013
(…)
85 India 38 9 36
(…)
94 Colombia 37 7 36
94 Egypt 37 6 32
(…)
100 China 36 8 40
110 Ecuador 33 5 35
119 Belarus 31 5 29
(…)
145 Kenya 25 8 27
166 Uzbekistan 18 6 17
175 Somalia 8 4 8
Prof. Dr. Edda Müller (Chair); Berlin
Prof. Dr. Jürgen Marten (Vice Chair);
Berlin
Dr. Hedda von Wedel (Vice Chair); Andernach
Dr. Anna-Maija Mertens (General Manager); Berlin
TI Germany Board members & General Manager
Volunteers, an Integral Part of TI Germany
Membership
More than 1.100
members
43 corporate
members
Regional Chapters Working Groups
Lead by volunteers
with special expertise
Lead by voluntary working
members in the regions
• Hamburg/ Schleswig-
Holstein
• Bremen
• Berlin/Brandenburg
• Niedersachsen
• Ruhrgebiet-Westfalen
• Thüringen/Sachsen-
Anhalt
• Sachsen
• Rheinland
• Frankfurt/Rhein-Main
• Metropolregion Nürnberg
• Baden-Württemberg
• München
• ensure local
presence
• offer local options
for active
cooperation
• work on local
topics
Regional groups
Agenda
1. Transparency International in Germany and Worldwide
2. Governance Gaps in the International Anti-Corruption Framework
3. Closing the Gap – Which Role Do Companies and NGOs Play?
4. Natural Resource Governance and Corruption
5. Case Study: Extractive Industries Transparency Initiative (EITI)
6. Corruption Scenarios
International Anti-Corruption Framework
• Corruption is perceived as one of the biggest challenges in
the 21st century
• Increasing international efforts to fight corruption
• The international anti-corruption framework is roughly made
up of:
• International Conventions & Treaties
• Soft Law approaches
• New regulatory initiatives
International Anti-Corruption Framework
Name of Treaty/Convention Adoption Entry into
Force
No of
Signatories
Inter-American Convention against
Corruption
(OAS Convention)
1996 1997 28
EU Convention on the Fight
against Corruption 1997 2005
OECD Convention on the Bribery
of Foreign Public Officials in
International Business
Transactions (OECD Anti-Bribery
Convention)
1997 1999 41
Council of Europe Criminal Law
Convention 1998 2002 50
Council of Europe Civil Law
Convention 1999 2003 42
Southern African Development
Community Protocol against
Corruption (SADC Protocol)
2001 2003 14
ADB-OECD Action Plan for Asia-
Pacific 2001 -- 31
United Nations Convention against
Corruption (UNCAC) 2003 2005 140
African Union Convention on
Preventing and Combating
Corruption (AU Convention)
2003 2006 48
International Anti-Corruption Framework
• Marks the starting point in the development of international anti-corruption
regulation
• First global convention against corruption
• Bribery of foreign public officials was made a punishable offense for
companies from all OECD countries for the first time
• Level playing field between US companies (FCPA since 1977), and
companies from other OECD countries restored
• Monitoring and enforcement through OECD Working Group on Bribery in
International Business Transactions
• Produces country monitoring reports that are published online
• No international court, but can put pressure on countries
OECD Anti-Bribery Convention (1997/1999)
International Anti-Corruption Framework
• First globally binding treaty on combating corruption under international law
• Shift in focus form effective law enforcement towards more preventive
measures
• State parties need to install preventive anti-corruption bodies
• Intensified international cooperation between members
• Contains also rules on the recovery of stolen assets
• Germany ratified UNCAC only in 2014
United Nations Convention against Corruption (2003/2005)
International Anti-Corruption Framework
Name of Guideline/
Initiative Date of Creation Purpose of Initiative Initiating Institution
OECD Guidelines for
Multinational Enterprises
1976 (last updated
2011)
Recommendations for MNCs issued by signatory
governments to the OECD
Governments of OECD
countries
ICC Rules on Combating
Corruption
1977 (last revised
2011)
Voluntary rules for self-regulation developed by
the ICC Commission on Corporate Responsibility
and Anti-corruption
Business sector
UN Global Compact 2000 (incorporation of
10th principle 2004)
Voluntary initiative launched by former UN
Secretary-General Kofi Annan to encourage
businesses worldwide to adopt sustainable and
socially responsible policies
UN
GRI Sustainability
Reporting Guidelines
2000 (G4 Guidelines
represent the latest
version of the GRI
Guidelines, updated in
2013)
Voluntary reporting guidelines developed by the
independent non-profit organization GRI in
collaboration with UNEP and UNGC
Civil society
TI Business Principles for
Countering Bribery
2003 (last updated in
2013)
Set of principles issued by TI and SAI to assist
companies in the design and implementation of
effective anti-bribery policies
Civil society
International Anti-Corruption Framework
• Launched in 2000 by former UN Secretary-General Kofi Annan
to encourage businesses worldwide to adopt sustainable and
socially responsible policies
• World’slargestcorporatesustainabilityinitiativewithmorethan
8,000 companies and more than 4,000 non-businesses from
over 160 countries
• 10th principle against corruption introduced in 2004
• Businesses engage in working out guidelines for the
organizational implementation of standards on human rights,
working conditions, environmental protection, and the
prevention of corruption
UN Global Compact
International Anti-Corruption Framework
• Aim to assist companies in designing and implementing effective anti-bribery
policies
• Have influenced a wide range of anti-bribery standards and initiatives
worldwide
• Release of the TI Business Principles for SME in 2008
• Developed with the cooperation of a multi-stakeholder Steering Committee
drawn from business, academia, trade unions and other non-governmental
bodies
TI Business Principles for Countering Bribery
Governance Gap
• Limited effects of worldwide anti-corruption efforts
• Gap between rule-making and enforcement
• Many countries ratify anti-corruption treaties due to pressure from the
international community, not because these states are willing to undergo a
process of genuine institutional change
• Slow progress regarding enforcement of the OECD Anti-Bribery Convention:
Only four countries – Germany, Switzerland, the UK, and the US – actively
prosecuting cases; in 20 countries little or no enforcement (TI report
“ExportingCorruption”,2015)
• Promulgation of soft law guidelines such as UNGC also unsatisfactory:
80,000 MNCs and more than 800,000 foreign affiliates to these MNCs
worldwide, but only 8,000 companies UNGC participants
Governance Gap
• Difficulties related to changing roles of states and private sector in a
globalized world
• On the one hand:
• attentuated position of states
• many pressing problems less amenable to state-base solutions
• corruption as a transnational governance challenge
• On the other hand:
• increasing importance of private sector, esp. MNCs
• Importance entails also greater responsibility: MNCs face demands from
various stakeholders to assume broader corporate responsibilities and
contribute to the regulation of business
Governance Gap
“Gapsintheinternationalinstitutionalframework,includingtheabsenceof
institutions or mechanisms at a global, regional or sub-regional level and
inconsistentmandatesofexistingorganizationsandmechanisms”
Agenda
1. Transparency International in Germany and Worldwide
2. Governance Gaps in the International Anti-Corruption Framework
3. Closing the Gap – Which Role Do Companies and NGOs Play?
4. Natural Resources Management and Corruption
5. Case Study: Extractive Industries Transparency Initiative (EITI)
6. Corruption Scenarios
Closing the Governance Gap
• New regulatory initiatives have emerged in recent years
to overcome these governance gaps
• Called by many names, heterogenous in nature
• Four core principles:
• Central role of private actors
• Decentralization of regulatory authority
• Non-coerciveness
• Collective action approach
• NGOs and business sector important players in these
initiatives
Collective
actions
Multi-
stakeholder
Groups
Regulatory
Standard-
setting
Coordinated
Governance
Initiatives
Role of Companies and NGOs
• Nation states: From initiating to orchestrating function
• NGOs: From neglected to powerful organizations that put pressure on
states and companies
• MNCs: From targets of regulation to powerful players that contribute to the
design of the international institutional framework
Decreasing
involvement of
states
Increasing
involvement of
private sector
Conventions & Treaties
Soft Law
Coordinated governance initiatives
Agenda
1. Transparency International in Germany and Worldwide
2. Governance Gaps in the International Anti-Corruption Framework
3. Closing the Gap – Which Role Do Companies and NGOs Play?
4. Natural Resource Governance and Corruption
5. Case Study: Extractive Industries Transparency Initiative (EITI)
6. Corruption Scenarios
4. NATURAL RESOURCE GOVERNANCE AND
CORRUPTION
Freiburg, January 14th 2014
Berta van Schoor & Gerd Addicks
TI Germany, Baden-Württemberg Regional Chapter
Topics • „EMPIRICAL EVIDENCE“
• CLIMATE GOVERNANCE: VULNERABILITY TO CORRUPTION
• WATER GOVERNANCE: CHALLENGES, VULNERABILITY AND TYPES OF CORRUPTION
• MAGNITUDE AND MANIFESTATION OF CORRUPTION RISKS - FORESTRY / OIL
• EXTRACTIVE INDUSTRIES: „NATURAL RESOURCE CURSE“
CORRUPTION PERCEPTION INDEX 2014
3
Transnational corruption based on the 427 foreign bribery cases concluded since the entry into force of
the OECD Anti-Bribery Convention in 1999 (OECD Foreign Bribery Report 2014)
Sector (UNISIC)
Percentage of
cases
Bribes as a
percentage of the
transaction value
Extractive 19 % 21 %
Construction 15 % 4 %
Transportation and Storage 15 % 16 %
Information and Communication 10 % 5 %
Manufacturing 8 % 16 % ………………………………………………………………… ………………………… ………………………………..
Water Supply 3 % 2 % ………………………………………………………………… ……………………….... ………………………………..
4
CLIMATE GOVERNANCE: Vulnerability to Corruption
• Complex framework of international conventions, norms and regulations (intergovernmental institutions and compliance mechanisms)
• Independent systems of governance in their own right (regional, national and city governance, as well as multi-stakeholder partnerships)
• Patchwork of multilateral funds operating according to their own rules and procedures
Adaptation Fund – Climate Investment Fund Trust Funds – Least Developed Countries Fund – Special Climate Change Fund – Forest Carbon Partnership Facility (consisting of a
Readiness Fund and a Carbon Fund) – United Nations Program on Reducing Emissions from Deforestation and Forest Degradation (UN-REDD) - ……………………
CLIMATE GOVERNANCE: Vulnerability to Corruption
• Increasing economic value of climate governance decisions and initiatives (fostering perverse economic incentives)
• Estimates of total climate change investments in mitigation efforts alone amount to at almost US$700 billion by 2020.
• Public investments will eventually flow through new, relatively uncoordinated and untested channels.
• New arenas of dispute (distortion of scientific facts, false claims about the green credentials, etc.)
CLIMATE GOVERNANCE: Vulnerability to Corruption
• Application of instruments to mitigate climate change:
- Cap-and-trade systems (local, regional, national) with problems like resale and misreporting of used carbon offsets, value-added tax frauds / carousel fraud, etc.
- Mechanisms for the transfer of wealth and technology to developing countries – “Reducing Emissions from Deforestation and Forest Degradation” (REDD+) initiative with problems of absorptive capacity in recipient countries
WATER GOVERNANCE: Challenges
• Increasing gap between water supply and demand (competition for water).
• Demand: Population growth and urbanization, shifting dietary habits towards more water-intensive foods, new fuel crops, expanding water-intensive industries.
• Supply: Water pollution, degraded ecosystems and global warming endanger local water recharge, quality and sustainable supply.
WATER GOVERNANCE: Vulnerability to Corruption
• Water governance spills across agencies and national borders.
• Water management is still viewed as a largely technical issue.
• Water involves large flows of public money.
• Corruption in water most affects those with the weakest voice.
• Water is scarce, and becoming more so.
TYPES OF CORRUPTION along the Water Value Chain
POLICY-MAKING & REGULATION
PLANNING & BUDGETING
MANAGEMENT & PROGR. DESIGN
Inter-ministerial collusion: cover-up over environmental
social impacts
Kickbacks to cover up pollution
Bribery to silence public protest
Bribery for water rights; extortion for permits
Bribery to influence allocation of funding to higher-capital-
investment projects
Bribery to distort water management to benefit
officials
Influence to benefit particular interest groups
(project site selection)
TYPES OF CORRUPTION along the Water Value Chain
TENDERING & PROCUREMENT
CONSTRUCTION
OPERATIONS & MAINTENANCE
Bribery to win large-scale projects or to secure
contracts
Corruption in the supply process (inflated
estimates of inputs)
Fraudulent invoicing (over-billing by suppliers)
Fraud in construction (“savings on the ground”)
Bribes to cover up waste water discharge and
pollution
Bribery for excessive extraction by industry
Fraudulent water reading PAYMENT FOR
SERVICES
Administrative corruption for water
access and speed
MAGNITUDE AND MANIFESTATION OF CORRUPTION RISKS
FORESTS
• Diffuse renewable resources
• Management tends to be relatively decentralized
• Commonly utilized on a daily basis by communities
• Harvested with much simpler technologies
OIL / MINERALS
• Point source and non-renewable resources, typically geographically concentrated
• Management tends to be centralized
• Non-extractable for local communities
• Exploitation requires the specialized expertise of multinational oil firms
MAGNITUDE AND MANIFESTATION OF CORRUPTION RISKS
FORESTS
CORRUPTION RISKS:
• Concessions to exploit forestry resources (administrative rather than
competitive allocation inviting bribery, patronage, inefficiency)
• Capture of forestry management by local elites (in decentralized
systems)
• Petty corruption at the monitoring and enforcement level (for example: forest rangers getting
bribes for not addressing illegal or non-concessional exploitation - from firms, local officials, or members of the local population)
OIL / MINERALS
CORRUPTION RISKS:
• Allocation of contracts, licenses and concessions to private companies
• Lack of transparency in how much revenues the state receives and what it spends it on
• Government not accountable to anyone
EXTRACTIVE INDUSTRIES:
„NATURAL RESOURCE CURSE“ • Abundance / wealth of natural resources leads to a
„NATURAL RESOURCE CURSE“.
• Resource wealth and high rents / revenues are associated with bad economic performance: „PARADOX OF PLENTY“.
• Rents induce corruption mainly in two different forms:
- “RENT-SEEKING” (socially costly pursuit of rents) - “PATRONAGE” (use of public resources to secure political power)
EXTRACTIVE INDUSTRIES: „NATURAL RESOURCE CURSE“
Rent-seeking is
• “the idea that transfers are converted into social costs when individuals expend real resources and efforts to capture them”
• “not about production, but about a cake (resources) to fight for”
• “earning income without being productive”
• “ineffective allocation of scarce resources”
15
EXTRACTIVE INDUSTRIES: „NATURAL RESOURCE CURSE“
• Dominance of economically inefficient rent-seekers: „SURVIVAL OF THE FATTEST“
== Individuals and groups compete for shares of the rent rather than use their time and skills more productively.
== Governments pay off supporters to stay in power, resulting in reduced accountability and worse allocation of funds.
• Creation of rents via international contracts and concessions.
16
REFERENCES • COCKCROFT, Laurence (2012): Global Corruption. Money, Power and Ethics in the
Modern World. London and New York • DIMANT, Eugen (2013): The Nature of Corruption: An Interdisciplinary Perspective.
Discussion Paper No. 2013-59, November 07, 2013 (economics-ejournal) • KOLSTAD, Ivar / SOEREIDE, Tina (2009): Corruption in natural resource
management: Implications for policy makers. “Resources Policy”, 34, pp.214 – 226
• OECD (2014): OECD Foreign Bribery Report: An Analysis of the Crime of Bribery of Foreign Public Officials. OECD Publishing
• OVADIA, Jesse Salah (2014): Local Content and natural resource governance: The cases of Angola and Nigeria. “The Extractive Industries and Society”, 1 (2014), pp. 137 - 146
• TRANSPARENCY INTERNATIONAL (2011): Global Corruption Report 2011: Climate Change. Berlin
• TRANSPARENCY INTERNATIONAL (2008): Global Corruption Report 2008. Corruption in the Water Sector. Berlin
• VAN DER PLOEG, Frederick (2011): Natural Resources: Curse or Blessing? “Journal of Economic Literature “, 49:2, 366–420
• WALTER, Martin et al (2013): The impact of corruption on climate change: Threatening emissions trading mechanisms? “Environmental Development“, 7 (2013), pp. 128–138
17
Agenda
1. Transparency International in Germany and Worldwide
2. Governance Gaps in the International Anti-Corruption Framework
3. Closing the Gap – Which Role Do Companies and NGOs Play?
4. Natural Resource Governance and Corruption
5. Case Study: Extractive Industries Transparency Initiative (EITI)
6. Corruption Scenarios
EITI Case Study
What is the EITI?
• Non-profit organization under Norwegian law
• Global Standard to promote open and accountable management of natural
resources
• Seeks to strengthen government and company systems, inform public
debate, and enhance trust
• Multi-stakeholder approach: In each implementing country EITI is supported
by a coalition of governments, companies, and civil society working
together
EITI Case Study
History of the EITI
• Late 1990s / early 2000s: economists and political scientists showed how
resource-rich countries on average were not able to realize substantial gains
from the huge amounts of oil, gas or minerals they possessed
• This resource curse hindered most of these countries to exploit their natural
resources to the benefit of their citizens
• Instead, resource-rich countries tended to be:
• underdeveloped
• stricken by widespread mismanagement,
• weak institutions,
• and rampant corruption
• Conclusion: Transparency indispensable ingredient of any measures to be
taken against the curse
EITI Case Study
History of the EITI
• Increasing number of civil society organizations took up the
cause of the resource curse
• Growing campaign for more transparency in the extractive
sector, calling on the big oil and gas companies to “Publish
What You Pay”
• Global Witness report of 1999 focusing on the mismanagement
of oil in Angola
• BP published the signature bonus of USD111 million it had paid
to the Angolan government for an offshore license
• Unilateral approach by BP
• As aconsequenceofBP’sexperiences, oil companies argued
for a more collective and government-driven approach (level
playing field)
EITI Case Study
Legal Framework I
US Dodd-Frank Financial Reform Act, Section 1504:
• Adopted in 2010
• All extractive companies registered with the Securities and Exchange
Commission (SEC) have to publicly report how much they pay governments
for access to oil, gas and minerals
• Seen as landmark requirement by civil society
• However: US law was held up by industry lawsuits and regulatory delays
• Dec. 2015: SEC proposes new rules, which basically reaffirm provisions of
Section 1504:
• All payments above 100,000 USD to be published
• Country-by-country reporting
• Project-by-project reporting
EITI Case Study
Legal Framework II
Revised EU Transparency Directive 2013/50/EU and Accounting Directive 2013/34/EU
• In 2013, the EU agreed to adopt new transparency rules for oil, gas, mining, and logging
companies
• Companies have to publish details of the payments they make to governments for
access to natural resources:
• All payments of €100,000 and above
• Country-by-country reporting
• Project-by-project reporting
• Have to be transposed to national law of member states until June 2015
• Accounting Directive applies to all limited liability companies registered in the EU
• Transparency Directive extends provisions of the former to all companies in the
extractives and logging sector listed on EU regulated stock markets, but incorporated
outside the EU
EITI Case Study
EITI Countries
EITI Case Study
Facts & Figures
49 implementing countries
31 compliant with EITI requirements
1.836 Trillion USD revenues from oil, gas, and mining
Over 300 people working in the EITI secretariat
Over 1,000 people globally for the EITI
265 years covered in EITI reports
EITI Case Study
EITI Governance
EITI Case Study
Governing Bodies – EITI Board
Clare Short,
Chair of the
Board
Fredrik
Reinfeldt,
Next designated
EITI Chair
• 20 members, reflecting multi-stakeholder approach
• Responsibilities:
• Oversight and steering of EITI implementation
• Decides on status of implementing countries
• Members are also involved in a number of Board committees
EITI Case Study
Governing Bodies – EITI Board
EITI Case Study
Governing Bodies – EITI Secretariat
• Based in Oslo & hosted by government of Norway
• Responsibilities:
• Coordination of worldwide efforts of implementing EITI
• Outreach and advocacy
• Communication of lessons learned with stakeholders
• Management of a resource center on revenue management and
transparency
• Oversight of the Validation process
• Organization of EITI Conference
Jonas Moberg,
Head EITI
Secretariat
EITI Case Study
• In each implementing country
• Decides on how the EITI process should
work in the country
• Approves annual work plans and EITI
reports
• Composed of three groups:
• Implementing countries join EITI
voluntarily
• Extractive companies all
companies operating in the
implementing country have to
participate
• Local civil society
Governing Bodies – EITI Multi-Stakeholder Group (MSG)
Extractive
Companies
Government
representatives
Civil society
Publish
payments made
to the
government
Publish
revenues
received by
companies
Establish
Monitor
process
NATIONAL
EITI Case Study
EITI Benefits
For Countries
• Improves government
systems including tax
collection and budgetary
planning
• Signals commitment to
accountable mgmt.
• Enhances citizens’trust
• Improves investment
climate
• Promotes greater
economic and political
stability
• Prevents conflict around
extractive sectors
For Companies
• Creates level playing
field
• Improved and more
stable investment
climate
• Mitigating political and
reputational risks:
investments are capital-
intensive and dependent
on long-term stability
• Helps to demonstrate
the contribution that
their investment makes
to a country.
For Civil Society
• Increasing the amount
of information in the
public domain about the
revenues governments
• Reliable information
abouttheircountry’s
natural resources
• Enables them to hold
government and
companies to account
EITI Case Study
A broad coalition of governments, civil society and international organizations
supports the EITI, including 400 NGOs, World Bank, International Monetary
Fund, International Council on Mining and Metals and the regional development
banks. These organizations provide technical and financial support to
implementing countries, and support EITI outreach.
EITI Supporters
EITI Case Study
• Publicly support the EITI and help to promote the Standard internationally and
in countries where they operate
• Three steps:
• Publicly declare support of EITI principles
• Complete and submit the EITI Supporting Company Form
• Consider making an annual financial contribution to the international
management of between US $20,000 and US $60,000 (depending on the
company size)
• Over 90 major oil, gas and mining companies are supporters
EITI Supporters – Supporting Companies
EITI Case Study
• Support and promote EITI in international and multilateral forums
• Encourage own companies to become supporters of the initiative
• Encourage resource-rich countries, through diplomatic and commercial
channels, to implement the EITI
• Provide technical support in resource management to implementing countries
which have low technical capacity
• Commit to high standards of transparency in domestic extractive sector
• Finance the international management of the EITI and the World Bank-
administered Multi-Donor Trust Fund
EITI Supporters – Supporting Governments
EITI Case Study
Source: https://eiti.org/about/funding
EITI Case Study
Multi-Donor Trust Fund (MDTF)
• Administered by the World Bank
• Provides technical and financial assistance to implementing countries
• The support includes:
• Making EITI advisors and consultants available to governments to
assist them in implementation
• Sharing international best practices
• Providing grants to governments to help support EITI implementation
EITI Case Study
From Candidature to Compliance – 7 EITI
Requirements
1. Effective oversight by the multi-stakeholder group.
2. Timely publication of EITI Reports.
3. EITI Reports include contextual information
4. The production of comprehensive EITI Reports that include full
government disclosure of extractive industry revenues
5. A credible assurance process applying international standards.
6. EITI Reports that are comprehensible, actively promoted, publicly
accessible, and contribute to public debate.
7. The MSG to take steps to act on lessons learned and review the
outcomes and impact of EITI implementation.
EITI Candidate
EITI
Compliant
EITI Case Study
From Candidature to Compliance: EITI Validation Process
International Secretariat informs the MSG about the schedule for validation
International Secretariat procures independent validator
Validation: The Validator analyzes adherence to EITI Standard by assessing compliance with the 7 EITI Requirements
Validator produces draft validation report
Draft Validation Report is submitted to the MSG andtheEITIBoard’sValidationCommittee
Validator submits final validation report to Validation Committee
The EITI Board analyses the final Validation Report and decides on the status of the implementing country
EITI Case Study
Country Example – EITI Nigeria (NEITI)
• Africa’smostpopulouscountry
• Among the top 10 oil producers in the world; leading
producer in Africa
• Holds 2.2% of world's crude oil reserves and 2.7% of gas
(BP 2014 Statistical review)
• Plus: valuable lodes of aluminum, gold, tin, iron ore, coal, niobium, lead, and zinc
• Oil alone accounts for 90% of government revenue
• Thepetroleumsectoraccountedforabout14%ofNigeria’srealgrossdomestic
product and over 95% of exports in 2013 (African Economic Outlook).
• Government revenue from the petroleum sector: US $62.9 billion in 2012
• Over half of all Nigerians – 70 million people – live in poverty
EITI Case Study
EITI Nigeria (NEITI) – EITI Process
EITI Case Study
EITI Nigeria (NEITI)
• Democratic process only since 1999
• Then-President Obasanjo launched the NEITI in 2004: First African country to
follow EITI Standard
• 2007: NEITI legislation passed as first country
• 2010: One of the first countries to achieve EITI Compliant status
• Nigeria EITI process:
• has exposed outstanding debts by the national oil company to the
Federal Government
• recovered uncollected taxes
• identified weaknesses in the regulatory bodies,
• estimated oil theft
EITI Case Study
EITI Nigeria (NEITI) – What has changed?
• For the three-year period 2009-2011, NEITI Reports revealed that a company
owed tax payments adding up to US $8.3 billion
• US $443 million have already been recovered
• Before joining EITI: Ranked among the two very worst countries on TI’sCPI
• By 2014: Ranked 136th out of 175.
• Benefits of the EITI extend well beyond the production and dissemination of
revenue reports
EITI Case Study
- Discussion -
Transparency Paradox: Why do corrupt
governments voluntarily join EITI?
Agenda
1. Transparency International in Germany and Worldwide
2. Governance Gaps in the International Anti-Corruption Framework
3. Closing the Gap – Which Role Do Companies and NGOs Play?
4. Natural Resource Governance and Corruption
5. Case Study: Extractive Industries Transparency Initiative (EITI)
6. Corruption Scenarios
Transparency International Deutschland e.V.
Alte Schönhauser Str. 44
D-10119 Berlin
Tel: 030-549898-0
Fax: 030-549898-22
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